9 July 2011

The Science of Serendipity

Jim Surguy, this year’s Master of my Livery Company, The Worshipful Company of Marketors, has taken Innovation as his theme. (See my blog Innovation in Marketing 29th January 2011). Last week at the Cass Business School in the City of London he led a select group of Marketors in a Master class fromMatt Kingdon, Chairman and Co-founder of ?What If! Innovation consultants. After a conventional introduction to Marketing with Unilever Matt left to start a business in 1992 that now has a team of 250 operating from offices in the UK, the US and China. ?What If! are leading global innovation practitioners and help their clients either develop new revenue streams or change the way their organisation works so they become more innovative. Clients include Shell, Disney, BBC, Boots, HSBC, Lloyds, AstraZeneca and Waitrose, an impressive list if you consider that none of these companies are exactly shy at innovation. To date ?What If! Has carried out around 5,000 innovation projects and trained over 30,000 people in innovation skills. Matt made no claim that his work was proprietary so I freely pass it on.

For Matt Innovation involves not only creativity but also action. Ideas are easy. Implementation is hard. He has derived an equation to describe the process of Innovation at Work.

I x I x I = I

Where I = Insight; I = Ideas, I = Implementation and I = Innovation. He uses multipliers rather than additions because if any of the I’s on the left are zero the result is zero.

There is also a dimension of scale in Innovation. Some companies only concentrate on major innovations that will deliver significant incremental revenue. Others perhaps concentrate on small step changes, but continuous improvement. Which is right? We don’t really know because we’re only just starting to understand how this process really works. But we do know that companies which have an innovation process that is properly embedded achieve on average 12% higher returns than the rest. This is hardly surprising as they are the ones that had a proper growth strategy rather than wishful thinking of aiming at higher levels of revenue. 3M, for example, still target that 30% of its revenue should come from products that did not exist four years ago. This commits it to permanent processes of Innovation.

The most popular course at Harvard Business School today is Innovation. But how to teach it? Some aspects are no doubt capable of explanation but others are about insight and not everyone has that.

Matt Kingdon teaches a seven step process:

·Attitude

He wants you to get hungry, angry and/or righteous. Thus is Innovation born. Matt has visited Apple where he talked with Jonathan Ive, the British designer of Apple’s iconic products. Steve Jobs target for the iPhone was “something so good you want to lick it”. Google’s vision is “organising the world’s data”. When you have such an inspiring concept it informs everything your innovators do.

Matt was also working with EasyJet prior to its flotation. The founder, Stelios Haji-Ioannou wanted to have a dramatic announcement he could make to the Stock Exchange. He charged his people with reducing the downtime between flights from 55 minutes to 35 with obvious improvement in optimising use of its aircraft. Having set the target he stormed out of the room leaving the detail to his operational people.

·Organisation

The key is to embed the principle of Innovation in the core of the business and evolve it. Matt uses Four Seasons Hotels as his example. This upmarket chain manages 83 properties on a franchise basis for many different owners. Recruitment is based on the principle of “What your Mama ought to have taught ya”, i.e. manners. They reason that they can teach skills but unless manners have been learnt at an early age they will be hard to acquire. After that all promotion is from within and high flyers expect to move on to other properties in the group every two years. In this way good practice is moved around but it can be passed on even more swiftly. Employees are regimented in their behaviour to maintain standards but equally encouraged to show off.If an individual employee comes up with a good idea, appreciated by guests, that hotel manager will pass it on to his 82 colleagues and it can be implemented around the whole group within hours.

·Process

Matt has visited Google and met with Larry Page and Sergey Brin, its founders. Google HQ is of unusual design. The first department you see is the Laundry. Why? Well, Larry and Sergei want their engineers, known as Ninja Geeks to spend as much time there as possible. There is a concierge to take care of all their needs such as if the dog needs feeding. Ninja Geeks are only recruited after providing evidence of their high scores at school and university, not just a final certificate but hard evidence of results throughout their education. Not particularly well paid they are keen to build their long term reputation with a successful stint at Google no doubt followed by their own venture capital backed start up. Engineers are encouraged to spend 15% of time on their own ideas. They hold open meetings in sawn off meeting rooms with walk-ways where others are invited to contribute to their project. The best are finally adopted by Larry on what seems to be no more than a hunch. But the best of these go on to be Google Map, or Google Earth or whatever the latest is. Every Friday at 4pm Larry and Sergei demonstrate that week's five new products to the staff.

·Environment

While the rules are not clear Matt is convinced that the environment where the Innovation experiments take place is critical. Method is an example of an innovative company that believe that its products, toiletries and such should look good. So a bottle of washing up liquid should be attractive. This insight is developed in an environment that is thoroughly unorthodox.

·Skills

The key is to have both empathy and momentum. Empathy is the ability to put yourself in the shoes of your consumer. Matt had worked with the Board of a major chocolate company and played a trick on them. He booked them for a two hour session. The first hour was spent by asking every member of the Board to role play as a female consumer. He then asked them a series of questions about their lifestyle before discussing the company’s products with them. Then in the second hour he asked them to move to the back of the room while he brought in the actual young ladies that they had been representing. Unbeknown to them they had already been recruited for the purpose. He then asked them the same questions. Of course the answers were authentic and totally different. When he introduced the company's products the girls reacted negatively seeing them as something their granddads would have bought. The directors had learnt a hard lesson about empathy.

Momentum is the skill of getting on with stuff.

·Leadership

The central message here is to be the change you want. Matt had worked with the CEO of a major drugs firm and got him to visit the homes of actual consumers of his company’s products and talk to them about their depression or asthma or whatever their condition was that needed treating. This encouraged the technicians to do the same and real insight started to be gained leading to major advances in drug development as opposed to minor improvements that were just there to support a marketing message of “new and improved”.

·Getting Going

Matt seeks to get the CEO of his clients to agree to change within a pocket universe. i.e. a part of the organisation where, with the CEO’s permission, changes can be made. Just get going, then do it again, then again.

Of course, none of this is easy. If it was more would be doing it. And consulting firms like ?What If! would not be able to earn a living. In my career I have worked with some that were good at it and with others that were not. But the ones that were really good made it a natural way of doing business. They also did not just think that Innovation meant new product development. It was the whole process of Innovation including Innovation of the business process itself. Dell’s computers are not particularly innovative but their business model of making to order was and so they took a lion’s share of a growing market.

There are countless more examples but I enjoyed hearing those of Matt Kingdon who was generous in sharing his time and insights with us. There was considerable experience and knowledge in the room but we all learnt something new.